How much should I spend?

As a first homeowner you should avoid taking risks when renovating and spend conservatively. To make sure you don’t overcapitalise (when you spend more on a house than what you can sell it for) it’s a good idea not to spend more than 5% of the purchase price on renovations.

So based on the current median national house price of $437,500 (source: ABS), your renovation budget shouldn’t be much more than $20,000.

A well-planned and executed renovation can add up to 10% to the value of your home, especially if you hold onto the property for five or more years.
So by spending $20,000 renovating your average $437,500 home you could potentially make over $40,000 – double the money you invested.

Should I renovate?

Just because you can afford to renovate, doesn’t make it the right decision. You should consider all the pros and cons before committing your time and money:

Pros

• Added resale value.
• Make your home more comfortable and improve your standard of living.
• Invest in quality fixtures and fittings that will stand the test of time.
• Save time and money by renovating instead of re-locating. You can avoid all the stamp duty, agency and legal fees that come with moving by re-modelling your home to suit your changing needs.

Cons

• Potential to overspend and overcapitalise.
• May have to move out of home while works are being completed (or live in dust!).

What should I renovate?

For the best return on your renovation spend, you should be selective in your renovation choices. Some common value-adding renovation projects include highly-trafficked rooms like:

Kitchen

Average size: 8 square metres
Average renovation cost: $12,000-$16,000

Do

• Install a canopy rangehood and dishwasher.
• Use stone for surfaces.
• Keep the design open-plan.

Don’t

• Purchase expensive fixtures and fittings.
• Compromise bench and storage space.
• Use an unusual colour palette.

Read more: Island kitchen benchtop inspiration 

Bathroom

Average size: 6 square metres
Average renovation cost: $9,000-$12,000

Do

• Install a frameless glass shower.
• Lay floor-to-ceiling tiles – Include a double vanity (if there’s room).

Don’t

• Make extensive changes to the plumbing.
• Replace a combined bathtub/tub with a shower only.
• Overuse mosaic tiling.

Read more: Bathroom renovations for profit

Other renovation works to consider

New flooring

Average size: 150 square metres (standard 2-3 bedroom home)
Average sqm cost: $25-$100 per square metre (depending on material)
Average total cost: $3,750 -$15,000

Read more: How to: choose flooring for your home

Extra bedroom

Average size: 12 square metres
Average renovation cost: $18,000-$24,000

Deck or patio

Average size: 9 square metres
Average sqm cost: $180-$900 per square metre (depending on material)
Average total cost: $1,620- $8,000

Read more: Outdoor entertaining all year round

Read more: Home extensions: Decks and pergolas

Take your time

Although you might not be able to do it all, if you take your time to select the areas of your home that would benefit most from a revamp, you stand to boost your standard of living – and bank balance.

Council fees?

Don’t forget to also allow for council application fees (check with your local council for prices, which can be up to $2000 approx) and budget for an additional 10% on top of your planned costs, so you’re prepared for any unexpected expenses.

*Renovation costs sourced from online tendering siteServiceSeeking.com.au and are shown as a guide only. Actual quotes and prices may vary.